HomeMy WebLinkAboutTR-65-86 I
TOWN OF NEWCASTLE J (C()
.� REPORT File # . ,_
Res_ #
` ---- _'� "�• By-Law #
MEETING: Special Meeting of the General Purpose & Administration Committee
DATE: AUGUST 28, 1986
REPORT #: TR-65-86 FILE #:
Sl1B,ECT:
FINANCING PROPOSAL - RE: NEW ARENA
RECOMMENDATIONS:
It is respectfully recommended that the General Purpose and Administra-
tive Committee recommend to Council the following:
i. That report TR-65-86 be received; and
2. That a by-law be approved to establish a Reserve Fund entitled
"Reserve Fund - Capital Project Debentures" ; and
3. That Schedule III attached, which projects cash flow to retire
subsequent debenture issues be approved; and
4. That a By-Law to authorize the temporary borrowing of funds
from the Canadian Imperial Bank of Commerce to meet the current
expenditures of the municipality with respect to the new Arena
Project and Administrative complex be approved.
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TR-65-86
BACKGROUND AND COMMENTS:
At the Special Meeting of Council held on July 21, 1986 Resolution #C-638-86
was approved and reads as follows:
Moved by Councillor Hamre, seconded by Councillor Hubbard
That Resolution #C-636-86 be amended as follows:
That item #4 of Report CS-47-86 be changed to Item 5 and that item #4
read as follows:
"That Staff review and report to the General Purpose and Administration
Committee the detailed funding of the proposed Arena including O.H.A.P.
funds; and
That negotiations with Ontario Hydro commence considering the impact.
In order to develop a reasonable financing proposal staff have had
discussions with the Region of Durham re: debenture rates and terms, and with
our bankers, the Canadian Imperial Bank of Commerce re: the possible trends
in interest rates in the near and short term (under 3 years) .
The Region of Durham consulted with its fiscal agent, Wood Gundy, and their
estimation of the market place is detailed below. The charge for placing the
debentures is 3/4 of 1% of the placement plus if a large issue, i .e. more
than three purchasers, printing, legal fees, etc. with respect to the
debenture certificate.
The rate to place debentures today is 10% with a 15 year term. The rate to
place debentures in the spring of 1988, they feel will be in the 8 1/2% to 9%
range for a term of 15 years providing economic conditions remain constant
and/or continue to show further improvement.
The discussions with the Canadian Imperial Bank of Commerce indicates a loan
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General Purpose & Administration Committee Meeting Page 3
TR-65-86
rate over the next few years in the 9 3/4% to 10 3/4% range. The prime rate
today is 9 3/4% and the bank has agreed to lend the Town funds at the
prevailing prime rate subject to Council approving the required borrowing
by-1 aw.
The rate paid by the bank for investment of funds is currently in the 7 1/2%
to 8% range and it is anticipated that this rate will remain fairly constant
over the next few years.
The costs and method of financing the construction of the proposed arena
complex for the Town of Newcastle are outlined on the attached schedules.
Schedule 1 shows the Town's present status with respect to debentures
outstanding and is further subdivided into the following parts:
Part A - outstanding principal only as at December 31, 1985 and
repayment schedule.
Part B - outstanding interest only as at December 31, 1985 and repayment
schedule.
Part C - summary of part A & B and repayment schedule.
Schedule 2 summarizes transactions from the Reserves and the Reserve Funds and
indicates the current position of these funds as at August 20, 1986.
For the benefit of the new Councillors, it is appropriate for Staff to provide
a brief overview on the use of reserves and reserve funds. A reserve is an
allocation of accumulated net revenue. It has no reference to any specific
asset and does not require the physical segregation of money or assets as in
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TR-65-86
the case of a reserve fund. A reserve cannot have a revenue or expense
per se, like a reserve fund. Reserves are a part of the revenue fund and
therefore do not earn interest on their own, as in the case of reserve funds.
A reserve may be established for a predetermined purpose and applied for that
purpose at the discretion of council .
A reserve fund differs from a reserve in that reserve fund assets are
segregated and restricted to meet the purpose of the reserve fund. There are
two types of reserve funds - obligatory reserve funds and discretionary
reserve funds.
Obligatory reserve funds must be created whenever a statute requires revenue
received for special pruposes to be segregated from the general revenues of
the municipality.
Discretionary reserve funds are created under Section 165 of the Municipal
Act and are established whenever a municipal council wishes to earmark
revenues to finance and future projects for which it has the authority to
spend money and physically set aside a certian portion of any year's revenues
so that the funds are available as required.
There are two major advantages to discretionary reserve funds:
I. Similar to a reserve, they help to stabilize the general Municipal Tax
Levy. In a year when a large amount of revenue is required to finance
capital projects, a previously established discretionary reserve fund can
enable a municipality to spend money without affecting the general
municipal levy or the need to issue debentures.
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2. The assets of the reserve fund can be invested to earn income, thus
helping to reduce the amount of money to be set aside.
Reserve funds should not be considered as an automatic source of working
funds. Nevertheless, if there is an occassional need for temporary financing
for Capital Projects, and if the reserve fund assets are available for
short-term investment, lending them to the municipality could be a proper
procedure. This would require evidence of indebtedness through the issue of a
promissary note payable to the reserve fund. The interest rate paid to the
reserve fund should be reasonable and proper. Normally the rate paid would
be equal to what is paid had the funds been invested.
Staff have not considered the use of Reserve Funds to finance the new arena
project at this time.
Schedule 3 provides a projected forecast of cash that would be available to
offset future debenture issues for the new arena and administrative complex.
This forecast is based on available data with respect to debentures coming due
and other sources of revenue which have been budgeted for in prior years.
Should Council authorize staff to continue to provide these amounts in
subsequent yearly operating budgets, then there will not be any impact to the
ratepayers within the Town of Newcastle with respect to these two debenture
issues.
Schedule 4 provides an estimate of the total costs incurred with respect to
the construction of a twin pad arena, and banquet hall utilizing full
municipal services. These costs have been provided by the Director of
Community Services and are strictly estimates. Actual costs will not be known
until tenders have been called.
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Included in the funding scenario is the Town's contribution of 25% or
$1,421,250. This amount will have a direct impact on the ratepayers within
the Town of Newcastle.
When final construction costs are known, staff will bring forth a further
report outlining various methods of generating the Town's 25% contribution.
Some alternatives which may be considered are:
1. reduce the Town's share by applying a substantial portion of any surplus
realized in 1986 to the arena project.
2. consider using a portion of certain reserve funds.
3. amortize the net tax levy over a three year period.
Summary
In conclusion, staff believe that the new arena project can be properly
funded, however, I must advise all members of committee that no funds have
been provided for this project to date.
It is anticipated that Wintario monies in the amount of $312,500 will soon be
available which can be used to offset start-up costs.
Respectfully submitted,
V i
. Blanchard, j
Treasurer.
JRB/pp
ATTACHMENTS:
i
1
CORPORATION OF THE TOWN OF NEWCASTLE -SCHEDULE I , PART A
Outstanding Debenture PRINCIPAL (Town Portion Only)
& Repayment Schedule.
BY-LAW Explanation TOTAL PRINCIPAL
# DUE Dec./85 1986 1987 1988 1989 1990 1991 1992 1993
221-78 Courtice Fire Hall 130,968.41 28,471 .39 300749.11 34,165.67 37,582.24
74-68 Darlington Arena 81 ,785.51 10,903.87 11 ,872.13 12,926.38 14,074.24 15,324.03 16,684.86 - -
73-50 Sewer-Jackman Rd. 481969.52 4,320.84 5,040.98 57040.98 5,761 .12 6,481 .26 7,201 .40 7,201 .40 7,921 .54
73-51 Sewer-Coleman 25,491 .82 2,427.79 2,427.79 3,034.74 33,034.74 3,034.74 3,641 .69 3,641 .69 4,248.64
71-26 High School Audit. 49,000.00 7,000.00 7,000.00 8,000.00 8,000.00 9,000.00 10,000.00 - -
74-45 Darlington Arena 332,796.60 53,411 .80 59,574.70 65,737.60 72,927.65 81 ,144.85 -
75-74 N'castle Fire Hall 20,000.00 20,000.00 - - _ _
70-26 P.U.C. B'Ville 6,053.69 1 ,008.90 1 ,008.90 1 ,345.20 1 ,345.20 1 ,345.20 - -
68-18 Police & Fire Bldg. 111 ,300.00 34,300.00 37,000.00 40,000.00 - -
68-20 Industrial Land 5,400.04 1 ,710.01 1 ,800.01 1 ,890.02
1987 Baseline Bridge 8,600.00 8,600.00 - - _
1989 Works Garage 4,500.00 4,500.00 - - _
1990 B'ville PUC-Town Port. 1 ,589.70 1 ,589.70 - - _
1991 B'ville PUC-Town Port. 606.88 606.88 - - _
TOTAL 827,062.17 178,851 .18 156,473.62 172,140.59 142,725.19 116,330.08 37,527 95 10,843 09 12,170 18
CORPORATION OF THE TOWN OF NEWCASTLE -SCHEDULE I , PART B
Outstanding Debenture INTEREST (Town Portion Only)
& Repayment Schedule.
BY-LAW Explanation TOTAL INTEREST
# DUE 1986 1987 1988 1989 1990 1991 1992 1993
221-78 Courtice Fire Hall 26,899.21 11 ,323.08 8,450.88 5,302.51 1 ,822.74 - - _
74-68 Darlington Arena 27,213.07 7,262.55 6,294.29 5,240.04 4,092.18 23,842.39 1 ,481 .92 -
73-50 Sewer-Jackman Rd. 20,869.64 4,223.62 3,850.95 3,416.16 2,981 .38 2,484.48 1 ,925.47 1 ,304.35 683.23
73-51 Sewer-Coleman 10,783.96 2,198.67 1 ,989.27 1 ,779.88 1 ,518.13 1 ,256.38 994.64 680.54 366.45
71-26 High School Audit. 16,198.00 4,361 .00 3,738.00 3,115.00 2,403.00 1 ,691 .00 89000
74-45 Darlington Arena 114,724.95 35,775.63 30,033.87 23,629.59 16,562.79 8,723.07
.
75-74 N'castle Fire Hall 1 ,775.00 1 ,775.00 - _ _
70-26 P.U.C. B'Ville 13,870.01 590.21 491 .84 393.47 262.31 132.18
68-18 Police & Fire Bldg. 17,693.25 8,625.75 5,967.50 3,100.00 -
68-20 B'Ville PUC-Town Port. 121 .49 59.73 40.82 20.94
68-20 Industrial Land 729.47 358.77 245.16 125.54
1987 Baseline Bridge 537.50 537.50 - -
1989 Works Garage 281 .25 281 .25 - -
1990 B'ville PUC -Town Port. 99.36 99.36 - -
1991 B'ville PUC-Town Port. 37.93 37.93 - -
TOTAL 239,834.09 77,510.05 61 ,102.58 46,123.13 29,642.53 17,129 50 5,292 03 1 ,984 89 1 ,049 68
s.�
i
CORPORATION OF THE TOWN OF NEWCASTLE -SCHEDULE I , PART C
Summary of Outstanding Debenture PRINCIPAL & INTEREST
& Repayment Schedule.
BY-LAW Explanation TOTAL INTEREST
# DUE DEC 31/85 1986 1987 1988 1989 1990 1991 1992 1993
221-78 Courtice Fire Hall 157,786.62 39,794.47 39,199.99 39,468.18 39,404.98 - - _
74-68 Darlington Arena 108,998.58 18,166.42 18,166.42 18,166.42 18,166.42 18,166.42 18,166.78 - -
73-50 Sewer-Jackman Rd. 69,839.16 8,544.46 8,891 .93 8,457.14 8,742.50 8,965.74 9,126.87 8,505.75 8,604.77
73-51 Sewer-Coleman 36,275.78 4,626.46 4,417.06 4,814.62 4,552.87 4,291 .12 4,636.33 43,322.23 4,615.09
71-26 High School Audit. 65,198.00 11 ,361 .00 10,738.00 11 ,115.00 10,403.00 10,691 .00 10,890.00 -
74-45 Darlington Arena 447,521 .55 89,187.43 89,608.57 89,367.19 89,490.44 89867.92
,
75-74 N'castle Fire Hall 21 ,775.00 21 ,775.00 - - _ - _
70-26 P.U.C. B'Ville 7,923.70 1 ,599.11 1 $ 00.74 1 ,738.67 11607.51 1 ,477.67 -
68-18 Police & Fire Bldg. 128,993.25 42,925.75 42,967.50 43,100.00 - -
68-20 B'Ville PUC-Town Port. 892.20 303.80 297.74 290.66
68-20 Industrial Land 5,358.80 1 ,824.71 1 ,788.25 1 ,745.84 -
1987 Baseline Bridge 9,137.50 9,137.50 - - _
1989 Works Garage 4,781 .25 4,781 .25 - - _
1990 B'ville PUC-Town Port. 1 ,689.06 1 ,689.06 - - - _
1991 B'ville PUC-Town Port. 644.81 644.81 - - _
TOTAL 1 ,066,896.26 256,361 .23 217,576.20 218,263.72 172,367.72 133,459 87 42,819 98 12,827 98 13,219 86
CORPORATION OF THE TOWN OF NEWCASTLE SCHEDULE II
CONTINUITY OF RESERVES @ Aug. 40, 1986
WORKING SELF INSURED MUN. ACQUIS. MUNICIP. PUBLIC WORKS GARBAGE ANIMAL CONTROL PARKS & REC'N FIRE DEPT.
CAPITAL LOSSES REAL PROPERTY GRTS. POL. EQUIPMENT EQUIP. EQUIPMENT EQUIPMENT EQUIPMENT
a/c # 2900-1-8 2900-2-7 2900-3-6 2900-4-5 2900-10-7 2900-11-6 2900-12-5 2900-13-4 2900-14-3
Balance of Dec. 31/85 <799,334.84> <22,133.53><71,633.51> <1,765.00><531.593.97> <146,806.84> < 4,428.00> <30,976.59> <168,041.73>
REVENUES
Contrib. from Revenue Fund - *<42,106.54> - - - - <25,000.00> <30,000.00>
Contrib. from Others - - - - - - - - <16,775.25>
TOTAL REVENUE - <42,106.54> - - - - - <25.000.00> <46,775.25>
EXPENDITURES
Transfer to Capital Fund - - - - 226,925.16 - 2,185.92 3,087.00 3,326.79
Transfer to Revenue Fund - 2,990.68 - - 1,241.75 - - 87.50 28.00
Transfer to Reserve - - -
TOTAL EXPENDITURES - 2,990.68 - 228,166.91 - 2,185.92 3,174.50 3,454.79
BALANCE AT AUG. 20/86 <799,334.84> < 61,249,39><71,633.51> <1,765.00> <303,427.06> <146,806.84> <2,242.08> <52,802.09> <211,262.19>
CORPORATION OF THE TOWN OF NEWCASTLE SCHEDULE II (continuo
CONTINUITY OF RESERVES @ Aug. 20, 1986
TAX SICK CREDIT GENERAL PITS & QUARRIES INVENTORY BLDG & ENERGY
WRITE OFFS RESERVE CAPITAL RES. RESERVE RESERVE CONSERVATION TOTAL
a/c # 2900-5-4 2900-16-1 2900-17-0 2900-18-9 2900-19-8 2900-20-5
Balance of Dec. 31/85 <60,006.06> <44,970.88> <70,907.56> <18,104.32> <197,658.47> - <2,168.361.30>
REVENUES
Contrib. from Revenue Fund - - <20,000.00> - - < 20,000.00>< 137,106.54>
Contrib. from Others - - - < 1,000.00> - - < 17,775.25>
TOTAL REVENUE - - <20,000.00> < 1,000.00> - < 20,000.00>< 154,881.79>
EXPENDITURES
Transfer to Capital Fund - - - - - 235,624.87
Transfer to Revenue Fund - 9,333.71 10,383.53 16,251.71 - 40,316.68
Transfer to Reserve - - - -
TOTAL EXPENDITURES - 9,333.71 10,383.53 16,251.71 - - 275,941.75
BALANCE AT AUG. 20/86 <60,006.06> <35,637.17> <80,524.03> < 2,852.61> <197,658.47> < 20,000.00>2,047,301.34>
CORPORATION OF THE TOWN OF NEWCASTLE
SCHEDULE II
CONTINUITY OF RESERVE FUNDS @ Aug. 20, 1986
PARKING INDUSTRIAL ROADS PARKLAND COURTICE ADMINISTRATIVE INDUSTRIAL EXPROPRIATION O.H.R.P.
LOT DEVELOPMENT CAPITAL CASH-IN-LIEU O.H.A.P. IMPROVEMENTS DEBENTURE PROCEEDS
Balance of Dec. 31/85 < 78,759.20> <339,758.42> <79,293.76> <427,867.26> <561,460.91> <880,731.91> <27,066.72> < 10,377.80> <79,864.15>
REVENUES
Contrib. from Revenue Fund - - - - - <315,754.00>
Contrib. from Reserve Fund _ -
Contrib. from Capital Fund - _-
Contrib. from Others - < 49,916.76> < 11,348.97>
INVESTMENT INCOME: - -
- Own Funds (General Fund) < 683.90> < 2,528.99> < 649.51> < 3,269.33> < 4,271.16> < 6,763.54> < 201.79> < 77.79>
- Other (Outside Investments) - - _ _ _ _ _ _
ONTARIO HOME RENEWAL PROGRAM:
- Interest Earned
Parking Revenue < 28,179.93>
Land Sales & Equip. Sold - - < 8,585.72> - - -
Government Grants
Loan Proceeds
TOTAL REVENUE < 28,863.83> < 2,528.99> < 9,235.23> < 53,186.09> < 15,620.13> <322,517.54> < 201.79> < 77.79> _
EXPENDITURES
Transfer to Revenue 1,871.01 2,000.00 283.80 - _ _
Transfer to Capital - - 110.88 2,795.80 15,000.00 104,049.33 - < 5,551.81>
CHARGES FOR NET LONG TERM -
LIABILITES:
- Principal _ _ _
- Interest _ -
ONTARIO HOME RENEWAL PLAN: -
- Loan Forgiveness - _ - _ -
- Other _ _ - - - - �,
- 79,864.15
TOTAL EXPENDITURES 1,871.01 2,000.00 394.68 2,795.80 15,000.00 104,049.33 - 5,551.81 79,864.15
BALANCE AT AUG. 20/86 <105,752.02> <340,287.41> <88,134.31> <478,257.55> <562,081.04><1,099,200.12> <27,268.51> < 4,903.78> -
GURPURVION OF THE TOWN OF NEWCASTLE SCHEDULE II
CONTINUITY OF RESERVE FUNDS @ Aug 1986
LOT LEVY LOT LEVY LOT LEVY LOT LEVY LOT LEVY LOT LEVY COURTICE
NEWCASTLE NEWCASTLE NEWCASTLE COURTICE COURTICE COURTICE LIBRARY
COMM. SERV. PUBLIC WORKS CIVIC ADMIN. COMM. SERV. PUBLIC WORKS CIVIC ADMIN. CAPITAL TOTAL
Balance of Dec. 31/85 <318,912.43> <298,666.54> <141,575.69> < 36,986.70> <29,544.58> < 7,489.90> - <3,318,355.48>
REVENUES <20,039.54>
Contrib. from Revenue Fund - - - - - - < 10,000.00><325,754.00>
Contrib. from Reserve Fund _
Contrib. from Capital Fund
Contrib. from Others <162,817.46> <130,253.91> < 32,563.49> < 47,859.39> <38,287.50> < 9,571.86> < <482,619.34>
INVESTMENT INCOME: -
- Own Funds (General Fund) < 2,815.81> < 2,575.86> < 1,141.55> < 414.30 < 331.55> < 84.46> < < 25,809.58>
- Other (Outside Investments) - - _ -
ONTARIO HOME RENEWAL PROGRAM:
- Interest Earned - _
Parking Revenue - - - - - - < 28,179.93>
Land Sales & Equip. Sold - - - - - < - < 8,585.72>
Loan Proceeds - _ _
Government Grants - _
TOTAL REVENUE <165,633.27> <132,829.77> <33,705.04> < 48,273.73> < 38,619.05> < 9,656.32> < 10,000.00><870,948.57>
EXPENDITURES
Transfer to Revenue - - - - - - 4,154.81
Transfer to Capital - 50,000.00 - - - 177,507.82
CHARGES FOR NET LONG TERM -
LIABILITES:
- Principal _ _
- Interest _ -
ONTARIO HOME RENEWAL PLAN:
- Loan Forgiveness -
- Administration Charges - - - - - - - 79,864.15
TOTAL EXPENDITURE - 50,000.00 - - - - - 261,526.78
BALANCE AT AUG 20, 1986 <484,545.70> <381,496.31> <175,280.73> < 85,260.43> < 68,163.63> <17,146.22> < 10,000.00><3,927,777.27> �i
GUKPUKAIIUN Uf IHL 1UWN Uf NLWUASILL -,KHLUULL III
Projected Cash Flow- based on continued budgeting of
Debentures Retired and other sources as provided for in 1986
BY-LAW Explanation YEAR DEBENTURE
# RETIRED 1987 1988 1989 1990 1991 1992 1993
75-74 Newcastle Fire Hall 1986 21,775 21,775 21,775 21,775 21,775 21,775 21,775
1987 Baseline Bridge 1-986 9,137 - 9,137 9,137 9,137 9,137 9,137 9,137
1989 Works Garage 1986 4,781 4,781 4,781 4,781 4,781 4,781 4,781
1990 Bowmanville PUC-Town Portion 1986 1,689 1,689 1,689 1,689 1,689 1,689 1,689
1991 Bowmanville PUC-Town Portion 1986 645 645 645 645 645 645 645
68-18 Police & Fire Bldg. 1988 43,100 43, 100 43, 100 43, 100 43, 100
68-20 Bowmanville PUC-Town Portion 1988 290 290 290 290 290
68-20 Industrial Debenture 1988 1,746 1,746 1,746 1,746 1,746
221-78 Courtice Fire Hall 1989 39,405 39,405 39,405 39,405
74-45 Darlington Arena 1990 89,867 89,867 89,867
70-26 PUC-Bowmanville 1990 1,478 1,478 1,478
74-68 Darlington Arena 1991 18,167 18, 167
71-26 High School Aud. 1991 10,890 10,890
- Administrative Improvement 200,000 200,000 200,000 200,000 200,000
- Hospital Donation - 83,000 83,000 83,000 83,000 83,000 83,000
- U.S. Exchange - Fire Hall 15,393 15,393 15,393 15,393
- Darlington Arena 26,838 26,838
- Density Grant 150,000 150,000 150,000 150,000 150,000 150,000 150,000
Total available cash 188,027 271,027 516,163 570,961 662,306 718,201 718,201
188,027 - - - -
Excess Carried Over from previous year 271,027 279,891 155,526 122,506 145,381
Total cash available 77T,= 850,85Z $7%,$3'� 0$�7 $6 ,� L 6
Debenture Payment Required (695,326) (695,326) (695,326) (695,326) (695,326)
T7T,TT1 155,526- 1Z2 3T5,7S_1 6 6
Annual Debenture Payment is based on 5M issue i
6M issue at 11% for 15 years = $834,391 annual payment
w
�m
Sc.hedu- e 4
Statistical Breakdown
Twin Pad Arena With Banquet Facilities
& Full Municipal Services
Cost:
Land Acquisition $ 225,000
Water Main 275,000
Pumping Station 215,000
Engineering Costs to Provide Water 30,000
Sanitary Sewer Line 250,000
_ Engineering Costs - Sanitary Sewer 15,000
Twin Pad 3,000,000
Banquet Nall 700,000
Furnishings & Equipment 175,000
Site Preparation 800,000
Estimated Total Cost - $5,685,000
Funding:
1986 Province (1/3 of 1.5M) $ 500,000
(10% of 1.25M) 125,000
1987 Province (1/3 of 700,000) 233,333
Fund Raising 750,000
Town's Contribution 25% Tax Levy 1,421,250
Donations 180,000
Sale of Old Arena 200,000
Debenture Issue 2,275,417
$5,685,000